Quantum AMC Launches New Fund Offer – Quantum Small Cap Fund

Quantum AMC Launches New Fund Offer – Quantum Small Cap Fund

Hyderabad: Quantum Asset Management Company (AMC) has unveiled its latest offering to investors, the Quantum Small Cap Fund. This new fund offer (NFO) is set to open for subscription on Monday, October 16, 2023, and will remain open for investors to participate until Friday, October 27, 2023. Designed as an open-ended equity scheme, Quantum Small Cap Fund primarily focuses on investments in Small Cap Stocks. The fund will be co-managed by two experienced professionals, Chirag Mehta, the Chief Investment Officer, and Abhilasha Satale.

The Quantum Small Cap Fund will be benchmarked against the S&P BSE 250 Small Cap Total Return Index (TRI). The fund’s primary investment objective is to generate capital appreciation by investing in Small Cap Stocks.

The scheme will offer both a Direct and Regular Plan, providing investors with different options to suit their preferences. The fund managers will allocate between 65% to 100% of the fund’s assets to equity and equity-related instruments of Small Cap Companies.

Key Highlights of the Quantum Small Cap Fund:

  1. True to Label Fund: The fund is committed to maintaining discipline regarding its capacity to prevent excessive size from hindering performance.
  2. Prioritizes Liquidity: It targets a minimum average daily value of Rs. 2 crore in all stocks to ensure liquidity.
  3. High-Conviction Portfolio: The fund will maintain a portfolio comprising 25 to 60 stocks to achieve optimal diversification and avoid mirroring a “Closet” Small Cap Index.
  4. Agile Portfolio Construction: With a track record since 2006, the fund aims to judiciously build portfolios and adapt to changing market conditions.
  5. Ensuring Limited Ownership: The fund will generally limit its holdings to 5% of market capitalization in individual stocks.
  6. Sizeable Stock Exposure: Quantum AMC aims for a minimum weight of 2% at cost in each stock to reduce concentration risk and foster a balanced portfolio.

Commenting on the launch of the fund, Chirag Mehta, Chief Investment Officer & Fund Manager at Quantum AMC, stated, “Our Small Cap Fund is meant for investors who are looking for long-term capital appreciation. We have seen that in the long term, Small Cap stocks have demonstrated the capability of giving good returns potential. To ensure good returns for our customers, we will make investments in lesser-known, smaller businesses with growth prospects. Over time, these companies increase their revenue and earnings, which can ensure good returns for our investors.”

Mr. Mehta further added, “The biggest challenge in the small cap mutual fund space today is a large asset under management (AUM) size. Funds with large AUM tend to face liquidity issues if they end up owning a big part of a small-cap stock’s market capitalization. They may be compelled to have a long tail of stocks with unsubstantial weights. They may be forced to either sit on cash or to invest incremental inflows into mid or large-cap names, which is not what a small-cap fund’s objective is. The Quantum Small Cap Fund will limit its AUM size to an optimal level, which will enable it to hold a high-conviction, liquid portfolio of promising small cap businesses.”

I. V. Subramaniam, MD & Group Head- Equities at Quantum Advisors, the sponsor of Quantum Mutual Fund, emphasized the importance of smaller companies in the economy, stating, “The growth of the economy will be led not only by the large companies but by the rapid growth of the many startups that have sprung up in the last few years. With a proven track record since 2006, which demonstrates judicious portfolio management and adaptability to market conditions, Quantum Mutual Fund is well-positioned to enhance its investors-portfolio with Quantum Small Cap Fund. This scheme aims to provide exposure to companies through a meticulously curated and diversified portfolio.”

Quantum AMC aims to maintain a disciplined approach to fund capacity, prioritize liquidity, and build a high-conviction portfolio in an effort to provide investors with a well-managed and diversified small-cap investment opportunity.

Investors looking to explore the potential of small-cap stocks and capitalize on long-term capital appreciation can consider the Quantum Small Cap Fund, which aligns with their long-term financial goals. Subscription to the fund is available until October 27, 2023, providing ample opportunity for interested investors to participate.

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